Tesla Freezes AI Spending Before SpaceX Merger

Tesla recently reported third-quarter earnings that surpassed Wall Street projections for both revenue and adjusted earnings per share, driven partly by a rebound in vehicle deliveries and growth in energy storage. Despite this positive financial beat and a surprising free cash flow surge of $1.5 billion, the company's core automotive sales actually declined and operating profits fell significantly. This unexpected cash retention was largely the result of capital expenditures coming in billions of dollars below analyst forecasts while the firm navigates heavy investments in artificial intelligence and robotics like the Optimus humanoid. Compounding these developments, CEO Elon Musk announced that special committees have been formed at both Tesla and SpaceX to evaluate a potential merger between the two entities. While this historic corporate combination presents compelling financial logic, it still faces substantial hurdles and requires majority shareholder approval.